News just in, there has recently been an important VAT Tribunal Decision on the treatment of VAT in IVAs. In summary, the decision is that IVAs are to be treated as an exempt supply of financial services, such that VAT should not be charged on the nominee’s or supervisor’s fees etc. The full text of the judgement can be found here and further information can also be found on the web-site of Ruffles & Co, the solicitors acting for the IPs in this case. Please note that the preface to the decision is wrong where it credits Chinnery & Co with instructing Counsel for the taxpayer. Chinnery & Co have had absolutely no involvement with this case. Instructions were by Ruffles & Co only.
I understand though that HMRC have been given leave to appeal the decision, and that the current indication is that they are likely to do so. As a result, you need to be careful before jumping in and submitting a claim on your past invoices, and consider just submitting protective claim at this stage. You should also take you own advice from a VAT specialist on whether it is safe to stop charging VAT on your future invoices, or if it is better to pay it for now until the outcome of the appeal is known.
We will leave the thorny question of who should benefit from any VAT refunds received for a subsequent article, once HMRC has decided whether to appeal and the outcome of any such appeal is known.
